bird and call romney a tax liar. it is coming up moments away. comings was horrible. was there anyone who thought that comings was going to be really good? see you tomorrow. hey, larry, what are you looking at tonight? *-* our top story tonight, our first gallop poll has shocking news. it is no wonder that the president has spent the past debate week defending big bird and calling mitt romney a liar over tax reform and take a

listen to mitt romney today. >> these are tough times with real serious issues. so you have to scratch your head when the president spends the last week talking about saving big bird. >> so it has been five years to the day that the dow closed at the all time high. but would a romney win get investors to move the dow? one out of every five americans have no religious affiliations? we begin this evening with this story that is happening right now. the government has continued it's vendetta against big banks. the government accuses the mortgage lender of reckless

trifecta issuing at least 100,000 affected loans. this story comes as the cnbc.com story makes headlines. the question is why is the government and the taxpayor still in the housing business? let's go to our guest. diana, good evening. >> well look, confidence in housing is coming back. especially in home prices. some say they think home prices will fall further. optimism has been rising for 11 straight months. you don't have to look farther than record low mortgage rates. some claim it is a government

subsidy. there are short sales. it is fast becoming the exit of choice for banks and sellers. they are now moving faster thanks to government mandated streamlining and incentives. hofa has so far paid out $333 million for short sales part of the $10 billion that was set aside for the loan modification program. also pushing short sales so far under that program the banks have forgiven $8.67 billion in mortgage debt. that is tax free thanks to congress passing a tax relief act. that will cost close to $1

billion in revenues if you believe that the government is going to collect that. if housing is causing that on its own. is it time for the government to get out? >> can i come back to the $333 million out of the $10 billion? who got that money? we are fining banks left and right. i wish we wouldn't. it seems like it is helping. who is getting the $333 million? >> the banks and the borrowers. they are betting $3,000 in moving costs to get to do these short sales. they can be tricky and lengthy. they don't want the borrowers to walk away and they give the banks incentive as well. the thing is under that mortgage settlement, the banks have to do debt forgiveness.

and short sales can be a part of that. the tax bill is going to have big implications for a continued recovery in housing. >> absolutely. the question is this tax relief on short sales. if the tax relief your debt that is debt forgiveness that is usually taxed. that helps with the short sales. >> that expires at the end of this year. if that doesn't get extended in congress, the odds are, are they going to want to do more tax extenders? then short sales are going to come to a screeching halt. and they are less costly. >> absolutely. great report. let me turn to john bernstein

and stephen. >> i like this stuff about the short sales. but the other $75 billion that preceded it and the $200 billion is a waste of money and probably held up the problem longer than it should have. >> that is a good argument. i would argue as you probably suspect. that helped us to get us where we are. we have a bit of recovery in the housing market. but here is the question at hand. should the government get out of the way. you and i are going to agree. absolutely, the government need to wind down it's position otherwise private capitol can't compete with it in that space. private investors continue to

show no appetite in that risk. you are going to kill what little recovery we are seeing in the market. >> steve, let me get your take on private label and these short sales and this smaller program. what do you think? should the government get out of the way? >> it should have gotten out of the way years ago. probably 45-50% has recovered half of its value. how about that happen? the over arching thrust has been to keep in place two year defaulted way under water borrowers to subsidize them and thus it has prevented market clearing processes and delayed

the recovery. we need to get out of this now. it can work here. mr. bernstein's remarks remind me of those in 2009. after the stimulus we are going to have unemployment go above 8%. it went to 10% with the stimulus. >> i came here to listen to stephen make some sense and he has n't yet. he may be one of the only guys out there that doesn't realize how private investors have completely avoided the market. if you look at non agency mbs it is up from last year. >> jarod -- >> you should know that the recovery is based on cash investors and those who were buying for cash to rent out and

as an economist, you should know that deploying capitol to in efficient sectors is not acceptable. money is going into government and factories. >> stephen, i very much agree that we need a housing market at the bottom of this economy if we are going to have a foundation. >> jarod. >> stephen -- >> let's not talk over each other. listen. >> jarod i'll give you the last word. >> because home prices are beginning to appreciate. we have under a million under wat water borrowers and they are able to refinance. this is able to kill that now would be a huge error. >> i want to see the short sales

continue. that is all i want to see. the rest of it we have made a complete mess of it. and i fear we are going to make a mess out of the fha. it could go bankrupt before this is over. thank you both. coming up. we have the five year anniversary of the all time highs in the stock markets. five years ago today the how long will it take to get back to those highs? i think it could happen before year-end and you will hear why. later, tens of thousands of protesters fill the streets and nazi clad crowns waving swastikas. and i must say it will work in housing like every place else.

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another record day for the market. all the indexes hitting knew all time highs.

who was that guy? that was kudlow time machine. five years ago today when stocks were hitting all time highs. all time high at 1565, today the s&p 500 dropped a full percent. >> good evening to you. the bear took control of the markets today. today, the dow posted 110 point loss. the nasdaq was lower than 47. but, take a look at where we are, relative to those all time highs five years ago. the dow was 691 points off it's highest levels right now. it has managed to gain 105.8% since it's march 2009 lows. you can see it in the chart right there. while the s&p 500 is up.

it has rebounded 113%. the markets have come a long way. >> no, thank you jackie. the s&p is 7.9% below that all time high. and the question is what is it going to take for us to get back beyond those highs. let's talk to stephanie at "the street". we have andrew and art. before we get to the knew all time highs. andy busch, it is great to see you. were people worried about the imf lowering the forecast? i thought all that stuff was in the past? >> it was a slow news day. the imf worried that the u.s.

and japan could lose their safe haven status. it is not supposed to be a good season. you have guys dressed up in nazi uniforms and that is horrible. ge german chancellor said greece was going to stay in the european union. i recogard her statements as bullish. >> i think we have the tools in place. had we've seen these things in place a year ago, germany is going to get these things sorted. >> that is a great point.

>> stephanie, you think there is something out there that ip v t investors missed that would be bull issish bullish. they continue to stimulate their economy. they announced the liquidity program and this comes weeks after the largest in history. it began in june. so, i think this coupled with the rrr cuts with the interest rate cuts that we have seen this year, i think you are going to see a stableation in china and the 7.8% growth in china, maybe it is actually pretty accurate. >> larry, following up on that. we had young brands and they had very strong numbers. so, there is another support

point that china seems to be stableising. it takes away the thought that it is falling apart in china. and kind china has been improvie consumer part. >> doesn't the whole world know that easternings will be slower the market? >> i would agree with stephanie about the china point. and as far as the earnings season goes, if you missed the point that this is going to be one of the worst reporting seasons we have had in 11, we have had an aggressive reporting season. the market is more concerned about things like the fiscal

cliff and i'm not at all concerned about that. >> you guys can comment on it. i'm saying, the nano second it becomes clear on november 7th, that mitt romney becomes president, i don't know what the stock market will do the next day. small business people that will been hoarding cash will see a pro market president come in and they will go nuts the next day and start spending money and that is going to grow the economy and the stock market. take a whack at that one. >> i'm in agreement with that in a sense of two things. it has to do with tax reform and corporate tax reform. romney has the better plan but eliminates the extra territorial

nature of the tax code. i'm a big fan of that policpoli. >> you don't have to love romney to know he is going to strangle and love all businesses. the current president we don't know that. >> i'm saying a romney victory i'm going to come out and say it, will raise the animal spirits that will been down. the cash flow has been out there. it is the psychology that is going to improve. >> it is that and the gradual recovery of the economy. we have been seeing a pick up. housing has better than bottomed and the banks are getting healthier.

cni loans are up 3.5%. that is a leading indicator for consumer lending and that is very powerful in terms of having new leadership and more money for these companies to spend here. >> last 25 seconds when do we beat the old highs of 07? >> november 7th. my gosh, energy stocks and health care stocks. thank you very much. wonderful stuff. coming up tonight, what does chuck schumer think he is do. the full story plus a break in headlines all up next on kudlow. ♪

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quite a scene this morning when marco came to town making comments on greek suffering. >> german chancellor was dpreetdpree greeted by protesters today. estimated 50,000 protesters filled the streets. saying many people are suffer i

ing. meantime, the number of patients suffering from fungal meningitis climbed today. cases now in ten states as health workers are trying to warn those exposed to the contaminated drug. sandusky shocked pennsylvania last night with a radio broadcast last night blaming everyone else. >> charles schumer called for a return in clinton era tax rates. >> you know, it would be a huge mistake to take the dollars we gained from closing loop holes and put them into the highest income brackets rather than reducing the deficit. >> it is most regrettable that

he is do that go. he is throwing a huge monkey wrench into that. and byes way, cap gains go up and he is doing his own constituents in new york. a great disservice. coming up next, since the president's debate fi asco, obaa has done nothing but debate big bird. >> and romney is climbing in the polls and all that coming up next.

welcome back to the kudlow report. in this half hour, president obama getting a ton of donations from china and a ton of foreign donors and it is illegal. why isn't he putting a stop to it?

i don't see how they make it through each day. i couldn't do it without faith. do they vote blue or red? ralph read is going to tell us about that story. >> but first, mitt romney has bolted past president obama in the polls. leading 48-47. now he is closing in on the critical battleground states. >> good evening to you. just a few weeks ago team romney was considering giving up in ohio. maybe the most important state in 2012. now there the romney plan is to push harder. he came to dusty iowa on his way to iowa.

today about a navy s.e.a.l. romney went to a party. >> you can imagine how i felt when he was one of the two navy s.e.a.l.s killed on september 11th, it touched me obviously. >> after the debate romney soared over obama. today as president obama bheade to ohio the poll put him two points behind him. >> somebody is cracking down on big bird. he put up a cable tv add. >> big, yellow and a men nnace our economy. >> team obama overflew the mess sake today. i actually think we need a

president that talks about saving the economy and jobs and our future. >> with romney ahead among the likely voters and the bigger group of voters, democrats figure more than ever larry, that turnout will determine who wins. >> many thanks to steve. now it seems that president obama has done nothing but defend big bird and call romney a liar on taxes since the debate. it looks to me like it is working in romney's favor. we have ed rendell. >> my signal just died. >> and jennifer ruber and stephen law. jen, i go to you first. really, if you can't cut a

little pbs, what can you you cut. this is going to kill obama. >> it drives people back to that debate. rox knee couldn't get a better person to run. and i think they are convinced that they can still. destroy romney. i don't think that is possible after 70 million people see it directly and make an assessment of this guy. and they have another week before the presidential debate while public opinion sets in.

he is pumped up and i'll have it written up tomorrow. he sounds poised and focused and i think the president is in a little bit of trouble. >> first of all, saesame street wants the add pulled and third of all, the thing that troubles me, he will not face the press. not once after the bengazi ca tr catastrophy. >> as far as big bird, it was fun and it made a good point. if more children had been educated by that program in their early years.

i think the add is over the top in many ways and plus, if you are going to do it, get it first. but look, i agree with jennifer, i think the president should pivot to what he wants to do in the feature. i think he need to bring back the job's bill. the ceo said that if congress passed that, we would have one or two million good-paying jobs. >> governor -- >> wait a second i didn't interrupt you. >> and i think he should start talking about some of those things. >> governor, what is left though is such small potatoes. >> i want to say something.

governor romney continues to disregard facts. in his foreign policy speeches. >> there he goes larry. >> he says there was no discussion of terrorism in the other debates and that was wrong. >> you know what the big lie is? the president of the united states coming before the american people and lying about those attacks. >> let me get steve law. >> somebody explain that. >> somebody has to explain why obama is not explaining any of these things. >> but so should governor romney say the president didn't sign the free trade agreement. >> this is a key point. psychologically and factually. they, team obama is calling mitt romney a liar over the tax reform plan which even the

brookings institute acknowledges that they were wrong. steve, with obama calling romney a liar and 68 million people saw this debate, i got to believe that they are going to back fire against obama this is going to hurt obama. >> i think he turned a perfectly miserable debate performance which was entire survivable into a public relations fiasco. he went from being a sore loser to looking like a whiney weak ling. everything that he is doing cuts against the brand that he tries to maintain. even if you don't agree he with him, he comes across as a sore loser. >> jennifer, the thing is, hang on a second.

i got to get back, jennifer, if you call him a bad plutocrat who is throwing babies off the cliff and helping to kill women i get you can get away with it if only a few people see the adds. but if millions see what a final person mitt romney is, i think the negativism is going to rebound against him. that is the second killer point. >> yeah and it is not so easy in a debate as everyone who has watched these things for years knows to go on the offensive. if the president comes out making accusations, he doesn't have the facts on his side. they have back pedaled from the original study that says the plan can work. he comes across abracive and the next setting is going to be in a

town hall format. they don't want to see a lot of attack. somewhere along the way here, romney discovered his voice and the president lost hit. romney is much more revealing of his emotions and sdredirect wit audiences and confidence now. i think you have the two goes opposi opposite directions. >> thursday night, joe biden is going to have his hands full with paul ryan. not only because ryan is smart but he is young looking and the youthful vote is going to flock to him. i think that is joe biden's biggest problem. >> i think he has been a liebility on the ticket and has had problems telling the truth. >> it has not been documented.

>> i would like to ask you all a question, if you were president obama or his campaign and you heard governor romney say in a big foreign policy address that the -- >> you have gotten it wrong. >> i'm not going to accept the premise. >> he said negotiated. >> no, he didn't. >> look at the transcript. >> that is the truth. he has done as little as possible on trade. >> we will see on thursday night how the ryan debate goes with joe biden. right now i have to tell you ed, your man is in a heap of trouble. i appreciate it. >> jennifer rubin and steve, thank you very wuch. and to our big tweet. you have to love our cnbc intern. hi, don'those adds. coming up.

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welcome back to the kudlow report. the internet coffers are wide open. 8 month investigation by peter switser says there is an open door to foreign governments to exploit the weaknesses of campaigns.

>> is completely under commercial control of the chinese government. his business partnerships are under chinese government. his website is reyou ask yourself why is the campaign slit iso lis itting it at all? >> here is the problem.

>> they are soliciting donations for $190. if it is a $200 it has to be disclosed. under $200, it does not need to be disclosed. >> very creative. >> well, this isinteresting. mybarack obama.com is a political facebook. you can sign up and create a long page. you have foreign nationals o s

supporting obama. but why they are doing that for the campaign. i think creates enormous problems if there is alack of security on the back end. >> you can't tell the verification of any of that stuff. i think everyone should start investigating that. one in five americans report no religious affiliation and this trend could open a window into who they could vote for in this election. what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education.

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report out today shows one in five americans are reporting no reridge ligious affiliation. what does it say about who they want to lead this country in the next election? >> ralph, what do you make of this? one in twentiy and under 30 yeas old a third have no formal affiliation. what do you make of that? >> first of all, i don't want to

diminish the trend but i don't want to overstate it. it tends to track crisply with marriage and childbearing. and 25, 30, 40 years ago. most american males and females got married in their early 20s. those figures have been pushed back. my thesis is that a delayed religiousiosity, i don't think it is permanent. i don't want to get too political about the data. they start attending church and those kind of conservative behaviors are what lead them to

become conservative. you say you don't want to co downplay it. it is not good for this country. there is too much of it. ralph, if i don't have god each day, i'm going to be in a heap of trouble. i happen to worship in the catholic church, but a faith based life has got to be a more rewarding and fulfilling and a better life. >> i wouldn't overstate this data. for example, in this same report, 58% of the american people say that religion plays a very important role in their lives. that is only 3% lower than what it was ten years ago.

68% of them say they believe in god. a number of them say they are studying and looking at religion including the bible. >> that is sort of like a higher power, is that what that is? >> for some of them it reflects a loss of faith in all institutions whether it is wall street, the church, the media and even if you look at what is called the emerging church, a lot of it is labeled in an open way. i still think people are spiritually hungry and i believe that the church will find a way to connect with these folks. >> it saved my life. the unaffiliated make up a

quarter of the democratic party. whereas people who are faith based make up a third of the republican party and those are the white evangelicals of which you have had an association. are they growing larger from 8-20%? that is going to help the democratic party? >> well, i would say yes and no. in fact if you look at the republican party primaries in 2012, larry, fully 50.53% of the voters who voted in the primary said they were evangelicals and

in 2008 they were 23% of the entire elect toorate and i'm noi do think they will be of a higher percentage this time. >> you think it is going to be a major force and ralph, are they going to come out for mitt romney? >> again, looking at an earlier poll in july, they found that 71% said they were going to vote for mitt romney. that is a higher percentage of the vote than george w. bush got in 2000.

if you look at this increasing trend, among self identified liberals, they tend not to be church or religiously observe ant. they tend to be disconnect ed from the practices that the vast majority of americans testify to. the base of the democratic party is move ago way fring away from. that is troubling to me. >> this group that does not have an organized faith is a quarter of the democratic base. and the group is growing. if it goes to 30% it will become larger for us. i would get that a lot of democrats will not like that and will not move to the republican party. >> i would agree with that.

it is extraordinary when you think about the fact that this party nominated jimmy carter in 1976. >> all right. thank you very very much. we appreciate it. that sit for this evening's show. faith based life has saved my life. that is all i will say. thank you for watching. we will see you tomorrow evening. when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level.

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